Millions not prepared for paying off their mortgage
MILLIONS of UK homeowners have underestimated the time it will take to pay off their mortgage.
Four million mortgage borrowers – 32 per cent – face re-evaluating their retirement finances as their repayment age will be older than they expected.
A further one in 10 of those over 55 do not think they will ever be mortgage free, according to research from online broker L&C Mortgages.
The average 18 to 34-year-old believes they will be mortgage free by 51, the study found.
Those in the 35 to 54-year-old think it will be paid off by 58, while those aged 55-plus believe they will borrow into retirement age, paying it off by 68.
However, a group of these older borrowers are resigned to a lifetime of debt, with eight per cent expecting to pay their home loan until they die.
Of those who say they may still be paying off their mortgage after 65, two thirds of women said they do not have a financial plan in place to cover the expense, compared to only half of male respondents. More than a third of men also do not think it matters what age you have a mortgage at, compared to a fifth of women, which would suggest men have a more relaxed attitude to borrowing in later life.
David Hollingworth, associate director at L&C, said: “People are facing up to the fact that they are going to have their mortgage for longer.
“The reality for many older borrowers is that they will be paying off their mortgage into retirement and beyond, which is clearly a shock.
“The optimism displayed by the younger generation is admirable but perhaps misplaced.
“Our research shows that raising a family, among other commitments, can get in the way further down the line.”
He added: “People have to acknowledge they may be carrying this debt for longer than anticipated and plan accordingly.
“The debt isn’t going to magically disappear, and mortgage misery may become a reality down the line if they see a dip in income post retirement.”
The mortgage analysis found that more than half (58 per cent) of respondents are on cheaper fixed rate deals.
But nearly a third are still paying their lenders the more expensive standard variable rate (SVR).
Almost half of those who own their house outright said their last mortgage was on an SVR. This suggests borrowers could pay off their mortgage even earlier if they took time to find a better deal.